Producers remain in survival mode

摘要

A slight recovery in crude prices in recent weeks has failed to distract US shale producers from their mission to cut debt and lower drilling costs. US benchmark WTI crude prices have averaged just under $40/bl since the beginning of March, up from around $30/bl in January-February. But producers are not rushing to bring on line their backlog of drilled but uncompleted wells. Many face a more pressing priority to repair their balance sheets after taking heavy asset impairments and suffering credit rating downgrades. Some small and medium-sized producers, including Sandridge Energy, Midstates Petroleum and Goodrich Petroleum, have warned that heavy debt is constraining their ability to conduct business as usual, while others have already filed for bankruptcy. “Financial constraints may mean incremental revenues are first allocated to debt service and deleveraging, rather than to new capital expenditure on completions,” UK bank Barclays says.